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EPA Sets Timetable for Greenhouse-Gas Rules

By

Siobhan Hughes

Updated Dec. 23, 2010 6:52 p.m. ET

WASHINGTON—The Obama administration on Thursday said it would issue standards to control greenhouse-gas emissions from power plants and oil refineries within two years, the latest move to proceed with a signature environmental policy in the face of inaction by Congress.

The Environmental Protection Agency said that the standards, which have yet to be specified, will be proposed next year and finalized by the end of 2012, which coincides with the end of President Barack Obama's first term. The timeframe—announced two days before the Christmas holiday—was negotiated with environmental groups and state attorneys general, which had sued the agency over its failure to issue standards.

Gina McCarthy, the EPA's assistant administrator for air and radiation, told reporters that the standards would reduce greenhouse-gas emissions in a "cost-effective way," without setting a limit, or cap, on emissions. But businesses—backed by congressional Republicans who are planning to mount aggressive oversight of the EPA next year—complained that complying wouldn't be that easy, and said the timetable appeared aggressive.

"There is no off-the-shelf technology to address reductions in carbon," said Scott Segal, an attorney at Bracewell & Giuliani who represents utilities and refineries. "This is high-stakes poker that the agency is playing with a very inadequate database upon which to base their actions."

The EPA's action could force power plants to shift to natural gas, which produces less carbon dioxide than coal, and to operate more efficiently. It is thought to have a big effect on older power plants in areas such as Ohio, Kentucky, and parts of Pennsylvania.

Businesses say that will mean higher electricity costs, which in turn will mean higher costs for manufacturers who are already struggling to compete with overseas factories.

"What we're doing is attempting to combat CO2 emissions by driving up energy costs for everyone," said Charles Drevna, president of the National Petrochemical & Refiners Association. "It's crazy."

The EPA announcement also sets the stage for a battle between the EPA and Congress over the next two years, when Republicans have more seats in the Senate and take control of the House.

"The EPA has its foot firmly on the throat of our economic recovery," said Rep. Fred Upton (R., Mich.), who will oversee the EPA when he becomes chairman of the U.S. House Energy and Commerce Committee next year. "We will not allow the administration to regulate what they have been unable to legislate—this Christmas surprise is nothing short of a backdoor attempt to implement their failed job-killing cap-and-trade scheme."

Congress failed to pass the cap-and-trade legislation this year after opposition from coal, oil, and manufacturing states. In the next leg of the effort to rein in greenhouse-gas emissions, the EPA will propose the power-plant standards by July 26, and finalize the rules by May 26, 2012. The agency will propose standards for refineries by Dec. 10, and finalize the standards by Nov. 10, 2012.

The EPA has already begun an effort to regulate emissions from facilities. Starting next year, emitters will file their first-ever reports on annual greenhouse-gas emissions. Facilities such as power plants and refineries will also have to obtain state-issued permits to emit greenhouse-gases at any new or upgraded facility. States will issue the permits after companies show they are using the best available technology to control the emissions that scientists link to rising sea levels, and more frequent weather events such as drought.

The planned EPA emission standards are a separate tool that could be more far-reaching than the permitting requirements. The EPA said that the greenhouse-gas standards will ultimately apply to existing facilities starting in about 2015 or 2016 and are intended to reduce greenhouse-gas emissions. The EPA will also be able to enforce the standards.

"This is the major rule through which EPA can start to ratchet down global warming pollution, especially from the large sources," said Nathan Willcox, who directs the federal global warming program for Environment America, an environmental group. "With the permitting process, that's largely up to the states and whether an individual state wants to use the permitting process to crack down. But if they don't, the performance standards are nationwide and they are federally enforceable."

Though the EPA said that it still had to work out the details, a likely scenario is that the standard will limit the amount of carbon dioxide that a power plant can emit for each megawatt hour of electricity produced.

"That is how you would probably frame these standards up—they would be set in terms of pounds of CO2 emissions per megawatt hour or kilowatt hour," said David Doniger, a policy director at the Natural Resources Defense Council who signed on to the settlement with the EPA.

EPA Sets Timetable for Greenhouse-Gas Rules

WASHINGTON—The Obama administration on Thursday said it would issue standards to control greenhouse-gas emissions from power plants and oil refineries within two years, the latest move to proceed with a signature environmental policy in the face of inaction by Congress.